(CNS): The Cayman Islands Government, which is already working to make the process of foreclosures more transparent and fair, accepted a private member’s motion during the recent meeting of parliament brought by independent opposition MP Dwayne Seymour (BTE) that is asking the CIG to ensure that those forced into foreclosure get a fair price for their lost homes.
Seymour wants officials to consult with relevant stakeholders, especially financial institutions and real estate professionals, over how the repossession of people’s homes is being handled and the prices foreclosed properties command, as there are concerns that owners are not just losing their homes but hundreds of thousands of dollars in equity as well.
For many years, there has been public concern about how foreclosures work in every element of the process. Some have even suggested that banks, lawyers and realtors are colluding to seize people’s homes as soon as a loan payment is missed and then sell the property well below market value to pre-arranged buyers.
In his motion, Seymour asked the CIG to widen the marketing of foreclosed homes to ensure that they fetch a fair market price.
Premier André Ebanks told parliament that work is already underway to make the system work better and more justly. He said the government accepted and supported several elements of the motion, as there are gaps in the system around the fact that the real estate association has a monopoly on promoting the sale of foreclosed properties.
“A significant amount of work has been done to enhance the foreclosure procedures by virtue of the registered land amendment bill, which… will commence shortly,” Ebanks said. He said the CIG needs to “figure out a way to amplify the avenues of advertisement so it doesn’t seem like it’s tilted in one direction to give maximum opportunity for our people”.
Seymour wants the NCFC to look at a number of aspects about the process, including the proposal for a “publicly accessible online register of foreclosure properties” that would allow all prospective purchasers access.
He also wants the CIG to review whether or not financial institutions should adopt standardised procedures requiring broad public advertising, transparent bidding processes and consistent reporting on foreclosure sales. In a long presentation, Seymour pointed out that behind every foreclosure, there is a human story.
“The loss of property itself is painful enough,” he said. “But there is another issue which this parliament must consider. What happens to the value of the property when it is sold? Because the difference between a property selling for $500,000 and selling for $600,000 is not simply an accounting entry.
“That $100,000 may represent a substantial portion of someone’s remaining equity. It may determine whether a debt is completely extinguished. It may determine whether the former homeowner leaves the transaction with some financial resources to start again. It may determine that a family can afford another home,” he said.
Seymour, a former housing minister, said the approach towards foreclosures was “not simply a matter of debt collection” but of protection for homeowners, fairness, transparency, and economic opportunity.
Increasing marketing reach does not mean that every property marketed will automatically sell for more, but if 1,000 potential buyers know a property is available rather than just 100, there is more chance of it doing so, and more widespread advertising would appear much more fair.
By the time foreclosure occurs, families are already under enormous pressure. “The least the system should seek to do, in my view, is ensure that if their property ultimately has to be sold, it is given reasonable exposure to the market and sold through a process designed to obtain the best reasonably achievable value, because any remaining equity belongs to that homeowner.
“That point cannot be forgotten,” Seymour said, noting that a foreclosed home sold at proper market value means the family could retain sufficient equity to rebuild their lives.
“This is very important… as they will otherwise fall on… the government,” he added. “That is why the marketing process matters. This is why competition matters. This is why transparency matters. And that is why parliament should care.”
Seymour argued that there is no technological reason why Cayman can’t create an appropriate central point of access to foreclosure sale information if, after consultation, the government determines that it would be beneficial.
“A foreclosure sale should not become an opportunity for someone to acquire a property substantially below its reasonably obtainable market value simply because the owner is financially distressed,” he said, as he encouraged the CIG to find ways to get the best reasonably obtainable value for local people losing their homes in cases where there is no way to save it.